Randallstown Plaza Associates v. United States

13 Cl. Ct. 703, 1987 U.S. Claims LEXIS 210, 1987 WL 4282
CourtUnited States Court of Claims
DecidedNovember 13, 1987
DocketNo. 333-86C
StatusPublished
Cited by6 cases

This text of 13 Cl. Ct. 703 (Randallstown Plaza Associates v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Randallstown Plaza Associates v. United States, 13 Cl. Ct. 703, 1987 U.S. Claims LEXIS 210, 1987 WL 4282 (cc 1987).

Opinion

OPINION

MARGOLIS, Judge.

Plaintiff brought this action challenging the contracting officer’s denial of plaintiff’s claim, which seeks a rent increase that plaintiff contends is required by the terms of the lease. Both parties agree that there are no disputed issues of material fact, and this action now comes before the court on cross motions for summary judgment. After reviewing the record and after hearing oral argument, plaintiff’s motion for summary judgment on the issue of liability is granted, and defendant’s motion for summary judgment is denied.

FACTS

Early in the summer of 1979, the General Services Administration (GSA) began searching for office space in the Randalls-town, Maryland area. On August 1, 1979, the GSA issued Solicitation No. 79-49, which requested offers to lease approximately 4,100 square feet of net usable office space in the Randallstown area. Paragraph 10 of Schedule AA of the solicitation, the real estate tax and operating cost escalation clause, provided that the government would pay, as “additional rent,” real estate tax increases and operating expenses. Operating expenses were to be adjusted annually according to changes in the cost of living index occurring since the commencement of the lease term. In the event an option to renew was exercised, paragraph 10 provided that the additional rent applicable to the original term would be adjusted to take account of increases or decreases that occurred during the original term, with annual adjustments made thereafter.

Plaintiff responded to this solicitation with an offer, on GSA form 1364, to lease 4.292 square feet of office space at the Randallstown Plaza Shopping Center for a five-year term at $31,190 per year. Paragraph 2 of the offer sets forth the base rent for both the initial term and for any renewal terms. GSA form 1364 calculates base rent by multiplying the amount of net usable space (measured in square footage) by a proposed rate per square foot per year. Paragraph 2(1) indicates there were 4.292 square feet of net usable office space. The offered square foot rate per year in paragraph 2(2) was $7.50. The product of these two numbers yields the base rent subtotal of $31,190 per year in paragraph 2(3). The offer also provides for two five-year renewal options. The renewal terms are set forth in paragraphs 2(4) and 2(5) of the offer as:

Renewal Term(s)
(4) Sq. Ft. Rate Per Year
$ Rent in first yr. of term increased per C.P.I.

As a note to paragraph 2(4), the lease instructs the offeror to multiply the renewal rate by the total amount of square footage offered, as shown in paragraph 2(1), to calculate a renewal subtotal for paragraph 2(5). Plaintiff inserted a question mark [705]*705following the dollar symbol in paragraph 2(5) for the renewal subtotal.

The offer also requests that the lessee be liable for other payments as well. Paragraph 7 of the offer lists a number of additional responsibilities for which the government as lessee would be liable, including operating expenses and increases in real property taxes. Paragraph 7(1) estimates operating expenses to be an additional 20 cents per square foot per year, which would be “paid monthly with rent."

Negotiations between the parties ensued and on October 30, 1979, GSA accepted plaintiff’s August 21, 1979 offer. Accompanying GSA’s acceptance was an executed lease dated October 30, 1979 setting total annual rent at $33,048.36. This figure was reached by adding the estimated 20 cents per square foot per year for operating expenses, set forth in paragraph 7, to the $7.50 per square foot per year of the base rent, set forth in paragraph 2(2). The total, $7.70, was then multiplied by the number of square feet, 4,292, to reach $33,-048.36. Paragraph 7 of the lease specifically incorporates plaintiff’s offer, GSA’s solicitation, and the accompanying schedules as part of the lease. Paragraph 5 of the lease, written by the defendant, concerns the terms of renewal. It provides:

Two (2) five (5) year renewal options at the annual rental being paid at the end of the initial 5 years, and at the end of the first renewal option, as adjusted at the end of each one of these periods in accordance with the tax and operating cost escalation clauses____

The tax and operating cost escalation clause, paragraph 10 of Schedule AA, provides that operating cost expenses will rise or fall according to changes occurring in the Consumer Price Index (CPI) over the past year. As a result, while the base rent remained at $31,190 throughout the entirety of the first term of the lease, the amount due for operating expenses rose yearly according to increases in the CPI.

A supplemental lease agreement executed on January 24, 1980, established the term of the lease as beginning on that date and ending at midnight, January 23, 1985. On July 26, 1984, GSA exercised its first renewal option. On April 15, 1985, a second supplement to the lease was executed. This supplement adjusted certain inaccuracies in prior tax and operating cost escalations and also recalculated the base rate for operating expenses as provided for in the last clause of paragraph 10 of Schedule AA. Plaintiff signed the second supplement on May 16, 1985, but also indicated that, based on changes in the CPI over the. preceding five years, commencing February 1,1985 the base rent had been raised to $44,230.83 as provided for in paragraph 2(4) of the offer. Defendant refused to pay rent in that amount claiming that the renewal terms in the lease provided only for increases in taxes and operating costs, and the base rental for each renewal option was the same as the base rent for the original term.

Plaintiff filed a claim with the contracting officer on December 20, 1985, seeking recovery of the rental deficiencies and a decision fixing the base rent at the CPI-escalated level. The contracting officer denied plaintiff’s claim. Plaintiff then filed this action challenging the contracting officer’s decision.

The parties’ positions are as follows: Plaintiff contends that paragraph 2(4) of the offer clearly contemplates an increase in base rent pursuant to changes in the CPI. Plaintiff states that it reasonably understood paragraph 5 of the lease as incorporating paragraph 2(4) of the offer, that is, increasing base rent “in accordance with” the escalator clause, which is keyed to the CPI. Plaintiff argues that any ambiguity is a result of paragraph 5, and such ambiguity must be construed against the defendant, the drafter of paragraph 5.

Defendant disagrees with plaintiff’s characterizations of both contractual provisions. Defendant contends that it understood “rent” in paragraph 2(4) of the offer as applying only to “additional rent,” that is, operating expenses. Defendant claims that, in line with this understanding, paragraph 5 of the lease provides for rent to be increased “in accordance with” paragraph 10 of Schedule AA, the tax and operating [706]*706cost escalation clause. Defendant argues that because paragraph 10 only deals with tax and operating expenses, paragraph 5 of the lease must also only pertain to adjustment of operating expenses. Defendant maintains that any ambiguity is a result of paragraph 2(4), and such ambiguity must be construed against the plaintiff, the drafter of paragraph 2(4).

DISCUSSION

To borrow from the language of WPC Enterprises, Inc. v. United States, 163 Ct.Cl.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Vassar v. United States
63 Fed. Cl. 166 (Federal Claims, 2004)
Round Place, Inc. v. United States
39 Cont. Cas. Fed. 76,699 (Federal Claims, 1994)
North Star Alaska Housing Corp. v. United States
39 Cont. Cas. Fed. 76,607 (Federal Claims, 1993)
Chevron U.S.A., Inc. v. United States
36 Cont. Cas. Fed. 75,838 (Court of Claims, 1990)
Romala Corp. v. United States
36 Cont. Cas. Fed. 75,831 (Court of Claims, 1990)
XXX Construction Co. v. United States
35 Cont. Cas. Fed. 75,631 (Court of Claims, 1989)

Cite This Page — Counsel Stack

Bluebook (online)
13 Cl. Ct. 703, 1987 U.S. Claims LEXIS 210, 1987 WL 4282, Counsel Stack Legal Research, https://law.counselstack.com/opinion/randallstown-plaza-associates-v-united-states-cc-1987.